December 7, 2011

The Guardian

Thomson Reuters merger hasn't lived up to expectations

Creation of financial information Goliath turned into sorry tale of upheaval, clashes and disappointments

Thomson Corporation's acquisition of Reuters in 2008 was billed as the deal that would blow rivals like Bloomberg out of the water. Instead, like so many mergers and acquisitions, the tie-up that created Thomson Reuters hasn't lived up to the expectations of either consumers or shareholders.

The idea was to create a Goliath in the $24bn (£15bn) market for screen-based financial information that is used by banks and investment institutions around the world. The reality has been a sorry tale of management upheaval, culture clashes and disappointing product launches. In the latest chapter of the saga, chief executive Tom Glocer has announced his accelerated departure amid rumours he is being nudged out by Canada's Thomson family, the dominant shareholder, and former owner of the Times before Rupert Murdoch.

Analysts say the share price has underperformed and complain that hoped-for synergies and innovation haven't come through, despite all the trumpet blowing at the time of the transaction. The launch of the company's new Eikon product was behind schedule and the offering was less robust than the market had envisaged, although adjustments may put that right.

Douglas B Taylor at Burton-Taylor International Consulting LLC in Florida says "our data shows Bloomberg is closing the gap" on Thomson Reuters after being well behind four years ago. Taylor's research reveals that in 2007 Thomson Reuters spoke for more than 36% of the market against 25% for Bloomberg. But according to its estimates Bloomberg will have nearly caught up in 2011 with a 30.8% market share against 31.4% for Thomson Reuters. Something has gone horribly wrong. At the very least, the task of melding these two companies together has been far more complex than originally envisaged. A less kind interpretation is that management, which has cut many hundreds of jobs, has taken its eye off the ball, losing hapless investors billions along the way.
by Richard Wachman